Starting Your Own Business ? Hints & Tips Entrepreneurial Advice Suzie's Blogs ...

Business Assets - Current and Cash + Accounts Recievable There are 9 seperate classifications of assets I'd like to talk about. Today I'll cover the first 3 of them. Ready? Current Assets. Current assets are those which mature in less than one year. They are the sum of the following categories: Cash Accounts Receivable (A/R) Inventory (Inv) Notes Receivable (N/R) Prepaid Expenses Other Current Assets Cash. Cash is the only game in town. Cash pays bills and obligations. Inventory, receivables, land, building, machinery and equipment do not pay obligations even though they can be sold for cash and then used to pay bills. If cash is inadequate or improperly managed the company may become insolvent and be forced into bankruptcy. Include all checking, money market and short term savings accounts under Cash. Accounts Receivable (A/R) Accounts receivable are dollars due from customers. They arise as a result of the process of selling inventory or services on terms that allow delivery prior to the collection of cash. Inventory is sold and shipped, an invoice is sent to the customer, and later cash is collected. The receivable exists for the time period between the selling of the inventory and the receipt of cash Receivables are proportional to sales. As sales rise, the investment you must make in receivables also rises. Tomorrow: Inventory and Notes + More. Suzie Posted: Thursday 20th January 2005, 12:25 AM

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